With growth prospects becoming rarer in the continuing competitive insurance market, carriers are among three sets of buyers fueling a hot M&A environment for specialized managing general agencies, representatives of GC Securities said Sunday.

In a blog item on Guy Carpenter’s GCCapitalIdeas.com website, Andrew Beecroft, managing director for GC Securities, noted that carriers, brokers and private equity firms are all interested in MGA acquisition targets, and that some have gone for high-teens multiples of EBITDA—eclipsing the historic range of 8-to-12-times valuations.

He said that while brokers are the most active buyers, “insurance carriers continue to seek vertical integration.” In addition, he believes that private equity firms “are currently far more interested in investing in distribution via MGAs than in balance sheet companies.”

John Rowlands, a GC Securities senior vice president, described carrier motivations with reference to the challenging competitive market conditions stifling other growth opportunities.

Carriers “value MGAs’ specialist product and geographic expertise and distribution,” he said, noting that MGA deals allow them to “strategically grow and diversify with lower execution risk and costs.”

The blog item also mentioned the launch of new MGA incubators—including Soros-backed Vibe MGA Management (Vibe MM) in June—as drivers of M&A activity for MGAs.

According to the Vibe MM website, the independent MGA incubator platform provides “an entrepreneurial environment for ambitious underwriters,” featuring a comprehensive range of services suited to the particular needs of an MGA client through its incubation period. “Specialist services include capital investment for early stage and subsequent development; acquisition (where required to complement organic growth); capacity providers that support the aligned interests; and a structured approach to introducing new business opportunities,” the website says,

Vibe MM is a member of the Vibe group of companies, operating alongside Vibe Syndicate Management, a Lloyd’s managing agent managing Syndicate 5678 which underwrites a broad range of insurance and reinsurance business, and Inceptum Insurance Company, a leading provider of runoff insurance in the company market. The Group is owned principally by two investors: Quantum Strategic Partners Ltd., a private investment vehicle managed by Soros Fund Management LLC, and Pine Brook Partners.

While strategic buyers like carriers tend to pay more that financial buyers, according to the GC Securities representatives, they also noted even financial buyers are paying high values for “sufficiently desirable,” citing the example of London-based CFC Underwriting which garnered an investment from Vitruvian Partners in March.

The good times won’t last forever for MGAs, however, Beecroft warned. He noted that “only MGAs with sufficient specializations will succeed should markets harden,” with carriers likely opting to rely on their own in-house expertise for less specialized lines of business.